PGIM India Mutual Fund has announced an open-ended retirement fund with a five-year lock-in period or till the age of retirement at 60 and is aimed at providing capital appreciation and income in line with the customers’ retirement goals. The fund will invest in a mix of securities comprising equity, equity-related instruments, Real Estate Investment Trusts (REITs), Infrastructure Investment Trusts (InvITs), and fixed income securities.

The PGIM India Retirement Fund opened for subscription on March 26, and will close on April 9. It is benchmarked against the S&P BSE 500 TRI.

While launching the product on Tuesday, the fund house noted that people’s increasing longevity, rising healthcare costs and inflation necessitate saving for retirement at an early stage.

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The fund will have a diversified portfolio across sectors, with a minimum of 25 per cent allocation towards large-cap, mid-cap and small-cap segments and prefer companies with long-term growth potential and sustainable business models. According to the fund house, the portfolio will use a combination of top-down and bottom-up portfolio construction process, focusing on the fundamentals of each stock, including management quality and valuations.

Highlighting the importance of saving and investing for retirement, Ajit Menon, CEO, PGIM India Mutual Fund, said, “Living longer is an underappreciated risk into retirement and leaves everyone grappling to find solutions. Most of our life goals such as home, education, car, can be fulfilled with a conventional loan but when it comes to retirement, we can’t fund it with a loan. Investing in a dedicated fund earmarked for retirement also helps in staying committed longer towards your goal and benefit from long term compounding.”

Menon advises people to take the help of a financial advisor who would consider a range of factors, such as the company’s business prospects, historical and present financial condition, capital allocation efficiency, operating cash flows, valuation metrics, competitive edge, brand equity, etc., to ensure stable returns with a goal-based investing approach.

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“India is poised to be amongst the fastest growing G20 economy in the next few years as per the estimates by various global agencies. Over the long term, corporate earnings track the growth in nominal GDP of a country and stock prices track growth in earnings.

Commenting on the fund’s allocation strategy, Vinay Paharia, CIO, PGIM India Mutual Fund, says, “There is a continuing opportunity for investing in high growth and good quality large and mid-cap companies which can take advantage of the India growth story. Such companies can continue to compound capital at a rapid pace for a long period. Thus, a diversified portfolio of high growth and good quality stocks can help build a robust retirement corpus.”

The fund house said the fund’s equity portion will be managed by Vinay Paharia, while the debt, REITs, & InVITs portion will be managed by Puneet Pal.

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Features of PGIM India Retirement Fund in a nutshell:

• The fund has no exit load.
• The lock-in period is of five years or till the retirement age of 60, whichever is earlier.
• For initial purchase or switch-in, the minimum cost is Rs 5,000; after that, in multiples of Re 1. For additional purchase, the minimum cost is Rs. 1,000; after that, in multiples of Re 1.
• For systematic investment plans (SIPs), the minimum number of installments is five and the minimum amount per installment is Rs 1,000 each; after that, in multiples of Rs 1.
• The fund will re-open for continuous sale and repurchase within five days from the date of allotment.

Furthermore, investors must note that mutual fund investments are subject to market risks, so they should read all the scheme related documents carefully.